UK FIG regime vs Italy, Cyprus and Portugal: which new-resident tax regime fits you in 2026
The FIG (foreign income and gains) regime is the UK’s relief for new arrivals: for the first four tax years after you become UK resident, you can claim relief from UK tax on foreign income and gains. It is available to people who have not been UK tax resident for at least ten consecutive years. Italy, Cyprus and Portugal offer their own regimes for new residents, each with a different logic, duration and entry cost. This guide sets out how they compare and who each one suits.
Key Takeaways
- The UK FIG regime has applied since 6 April 2025, replaced the remittance basis and gives up to four tax years of relief on foreign income and gains.
- Italy’s new-resident regime is a flat substitute tax on foreign income: €300,000 a year for people transferring tax residence from 1 January 2026, for up to 15 years.
- Cyprus non-dom status exempts dividends and interest from Special Defence Contribution (SDC) for up to 17 years, with an option to extend for €250,000 per five-year period.
- Portugal’s IFICI is designed for people carrying out qualifying professional activities, not passive investors: 20% on that income and exemption of most foreign income for 10 years.
- FIG is the shortest, Italy has the highest fixed cost, Cyprus has the most accessible entry conditions and Portugal has the strictest professional requirements.
- The right choice depends on the structure of your income, your planning horizon and where your heirs will live, not just on the headline tax rate.
What the FIG regime is and how it replaced non-dom
Until April 2025, individuals whose domicile (their permanent home in the sense of UK law) was outside the UK could use the remittance basis: foreign income was taxed in the UK only when it was brought into the country. From 6 April 2025 that system was abolished: domicile no longer determines how you are taxed, and a residence-based system has taken its place.
The old regime was replaced by the 4-year FIG regime. According to HMRC guidance, you can use it if you are UK tax resident under the statutory residence test (SRT) and are within your first four years of UK tax residence following at least 10 consecutive years of non-UK residence.
The key difference from the remittance basis is that relieved foreign income and gains can be brought into the UK without a tax charge. The old system penalised remittances; the new one does not. The trade-off is a strict time limit: a maximum of four consecutive tax years starting with the year your UK residence begins. The transitional rules for former non-doms are covered in detail in the article on the abolition of UK non-dom status.
What FIG covers depends on the type of income. According to HMRC helpsheet HS266, relief extends to profits of a trade carried on wholly overseas, overseas property income, dividends from non-UK companies, foreign interest and foreign capital gains. Employment income is not covered: it has its own relief, Overseas Workday Relief.
Italy, Cyprus and Portugal: how the alternatives work
All three countries offer regimes for new residents, but they are built differently. Italy sells certainty for a fixed price, Cyprus exempts passive income from a separate levy, and Portugal targets people with specific professional activities. That difference matters more than the headline rates.
Italy: the flat tax for new residents
The regime under Article 24-bis of the Italian Consolidated Income Tax Act (TUIR) replaces tax on foreign income with a fixed annual amount, regardless of how much that income is. The conditions are set out by the Italian Revenue Agency (Agenzia delle Entrate): the applicant must not have been Italian tax resident for at least nine of the ten preceding years, and the regime lasts for up to 15 years.
The amount has been increased several times. The 2026 Budget Law (Legge 30 dicembre 2025, n. 199) raised it to €300,000 a year for people who transfer their tax residence to Italy from 1 January 2026, and the amount for each family member included in the regime rose to €50,000. People who moved earlier keep the amount that applied when they entered the regime.
The regime covers more than foreign income. It also removes the Italian taxes on foreign property and financial assets (IVIE and IVAFE) and inheritance and gift tax on assets located outside Italy. Specific countries can be excluded from the regime, in which case income from them is taxed under the ordinary rules with credit for foreign tax. There is one exception: capital gains on qualifying shareholdings realised in the first five years are not covered by the flat tax.
Cyprus: non-dom status and the SDC exemption
In Cyprus the relief concerns not income tax but a separate levy, the Special Defence Contribution (SDC), which applies to dividends and interest. A Cyprus tax resident who is not Cyprus-domiciled is exempt from SDC. You are treated as Cyprus-domiciled if you have been Cyprus tax resident for 17 of the last 20 years, so most newcomers are non-dom from arrival and remain so for up to 17 years.
A tax reform in force from 1 January 2026 changed several parameters. The income tax-free threshold was raised to €22,000, with the top rate of 35% applying to income above €72,000. For Cyprus-domiciled individuals, SDC on dividends fell to 5% (for profits from 2026), and SDC on rental income was abolished for everyone. There is also a new way to extend non-dom status after 17 years: according to KPMG’s summary of Tax Department Circular 2/2026, it can be extended by up to two five-year periods on payment of €250,000 for each.
There are two routes to Cyprus tax residence: spending more than 183 days in the country, or using the “60-day rule”. The latter requires at least 60 days’ presence, a permanent home and business or employment ties with Cyprus. Since the reform, the condition of not being tax resident in any other country has been removed from this rule.
Portugal: IFICI instead of NHR
Portugal’s former non-habitual resident (NHR) regime is closed to new applicants. It has been replaced by IFICI, the tax incentive for scientific research and innovation set out in Article 58-A of the Tax Benefits Statute (EBF). The name says it all: the regime is aimed at people who work in Portugal in specific fields, not at passive investors.
A participant pays 20% on income from qualifying employment or self-employment and is exempt on most foreign income: employment and self-employment income, investment income, rental income and capital gains. Foreign pensions are not exempt, and income paid by entities in jurisdictions with a clearly more favourable tax regime is taxed at 35%. The regime lasts for 10 consecutive years, provided you were not Portuguese tax resident in the previous five years and have not previously benefited from NHR.
If you are also weighing the immigration side of a move, it helps to understand the route to Portuguese citizenship early on: a tax regime and a residence status are separate questions with different timelines.
Who qualifies: entry conditions
The first step is to check whether you meet the entry conditions. Each regime has its own “cooling-off period” — the number of years you must not have been tax resident in that country — and Portugal adds a filter based on your activity. This is where the options that looked most attractive at first glance are most often ruled out.
| Criterion | UK FIG | Italy (24-bis) | Cyprus (non-dom) | Portugal (IFICI) |
|---|---|---|---|---|
| Prior non-residence | At least 10 consecutive tax years | At least 9 of the last 10 years | Not resident for 17 of the last 20 years and no Cyprus domicile of origin | No year of residence in the last 5 years |
| Activity requirement | None | None | None (business ties with Cyprus for the 60-day rule) | Qualifying activity from a closed list |
| Duration | Up to 4 tax years | Up to 15 years | Up to 17 years + extension of 5+5 years | 10 consecutive years |
| How it is claimed | Annual claim in the Self Assessment return | Option in the tax return, with an optional advance ruling | Status confirmed through the Cyprus Tax Department | Registration by 15 January of the year after the move |
For the UK regime it is important to count tax years, which run from 6 April to 5 April. If you were UK resident for even one year in the last ten, the FIG window is closed to you. If your residence began before 6 April 2025, you can use the regime only for the remaining years of the four-year window.
In Portugal the deadline is critical: according to the Portuguese tax authority’s FAQs (Portal das Finanças), the IFICI application must be submitted by 15 January of the year after the year you became resident. Missing this deadline is one of the most expensive mistakes.
Benefits of seeking professional advice on tax residence planning
- Review of your residence history in each of the four jurisdictions
- Modelling of the tax burden based on your actual income structure
- Selection of a move date that reflects each country’s tax year
- Separation of pre-arrival capital from income earned after the move
- Preparation of FIG claims and annual reporting to HMRC
- Analysis of the consequences for inheritance and future gifts
- Support with the transition to ordinary taxation after the relief
Once the entry conditions are checked, the next question is what each regime will actually cost you. This depends on the structure of your income: the same wealth can be taxed very differently depending on whether it produces dividends, interest, rent or capital growth.
Comparison by type of income
Comparing regimes by a single “tax rate” is misleading. The UK FIG regime relieves foreign income in full, but only for four years and at the cost of losing tax-free allowances. Italy charges a fixed amount regardless of income, which works for very large foreign incomes and not for moderate ones. Cyprus exempts dividends and interest from SDC, but other income is taxed on the ordinary scale. Portugal gives relief only to people whose activity qualifies.
| Type of income | UK FIG | Italy (24-bis) | Cyprus (non-dom) | Portugal (IFICI) |
|---|---|---|---|---|
| Foreign dividends and interest | Relieved on claim | Covered by the flat tax | Exempt from SDC | Exempt (except payments from low-tax jurisdictions — 35%) |
| Foreign capital gains | Relieved on claim | Covered, except qualifying shareholdings in the first 5 years | Depends on the type of asset | Exempt (same low-tax jurisdiction exception) |
| Overseas property income | Relieved on claim | Covered by the flat tax | SDC on rent abolished for everyone from 2026 | Exempt |
| Pay for work done abroad | Not within FIG; Overseas Workday Relief may apply | Covered if it is foreign income | Ordinary income tax scale; specific exemptions assessed individually | Exempt |
| Foreign pensions | Relieved on claim (with some exceptions) | Covered by the flat tax | Ordinary rules | Not exempt |
| Local income | UK ordinary rates | Italian ordinary rates | Cyprus ordinary rates | 20% for qualifying activity, ordinary rates otherwise |
For employees in the UK, Overseas Workday Relief matters too. Since April 2025 it is, according to HMRC, available for up to four tax years and capped at the lower of 30% of qualifying employment income or £300,000. The money can be paid into a UK account without a tax charge — remittances no longer need to be tracked.
A FIG claim has a cost that is easy to overlook. When you claim, you lose your personal allowance and the capital gains tax annual exempt amount. That exempt amount is currently £3,000, and CGT rates for gains from 6 April 2026 are 18% and 24%, as set out on GOV.UK. With modest foreign income, not claiming in a particular year may be the better option — this needs to be calculated for each year separately.
Inheritance, gifts and long-term planning
For wealthy families, inheritance tax often matters more than income tax. This is where the four jurisdictions differ most, and the difference shows not in the first years but 10–15 years after the move.
In the UK, inheritance tax (IHT) also moved to a residence basis from 6 April 2025. According to GOV.UK, you are a long-term UK resident if you have been UK tax resident for the previous 10 consecutive years or for at least 10 of the previous 20 years. From that point, IHT applies to overseas assets as well. After you leave, the status continues for between 3 and 10 years, depending on how long you lived in the UK.
Italy’s 24-bis regime exempts assets located outside Italy from inheritance and gift tax. Cyprus has no separate inheritance tax. Portugal has no classic inheritance tax either, but stamp duty (Imposto do Selo) may apply to gratuitous transfers of assets, depending on the degree of kinship and where the assets are located.
- If you plan to live in the UK for more than ten years, your overseas assets will fall within UK IHT, even though FIG will have ended long before.
- If your heirs live in another country, consider its rules too — inheritance tax may arise there.
- Holding structures (trusts, holding companies) need a separate review after the 2025 reform: existing arrangements do not always work as they did before.
What happens when the relief ends
Every new-resident regime is temporary, and the real tax burden begins when it ends. In the UK this happens as early as the fifth tax year: foreign income and gains are then taxed under the ordinary rules, whether or not you bring them into the UK. The Italian regime can last up to 15 years, Cyprus non-dom status up to 17 years with an extension option, and Portugal’s IFICI 10 years.
If you previously used the UK remittance basis, there is one more tool: the Temporary Repatriation Facility (TRF). It lets you designate foreign income and gains that arose before 6 April 2025 and pay a reduced charge on them. According to HMRC’s manual, the rate is 12% in the 2025–26 and 2026–27 tax years and 15% in 2027–28. The window is limited, so it is better to decide on TRF now rather than in the final year.
What to check before choosing a tax regime for your relocation
- Your tax residence history in each country over the last 10–20 years
- Your income structure: dividends, interest, rent, capital gains, salary
- Your planning horizon: four years, ten years or longer
- Where your heirs live and where your key assets are located
- Whether your activity is on the IFICI list, if Portugal is an option
- The immigration status that will allow you to live in the chosen country
- The cost of leaving the regime and the tax consequences of departure
A tax regime is only one part of a relocation. To live in a country you also need the right immigration status: in the UK this comes from specific visa routes, and their conditions are unrelated to the tax relief. An overview of the routes is available in the guide to immigration to the UK.
Planning the move: step by step
It is best to plan a move around a tax regime backwards: first establish which regime fits, then prepare your capital, and only then fix the date. Below is a general sequence for a move to the UK using FIG. For the other countries the stages are similar; the documents and deadlines differ.
Tax status review and choice of jurisdiction
Preparing your capital before arrival
Immigration status and the residence start date
FIG claim in your first tax return
Moving to ordinary taxation after the relief
Practical scenarios
Abstract comparisons are of limited use until they are applied to a real situation. Below are three typical client profiles. These are simplified models that illustrate the logic of the choice, not a calculation for a specific person.
An entrepreneur with large dividends from a foreign holding company. If annual foreign income runs into millions, the Italian flat tax becomes predictable and relatively modest — but only at very high income levels. Cyprus is also attractive here: non-dom dividends are free of SDC for up to 17 years. The UK FIG regime gives full relief, but for just four years, after which dividends are taxed at UK rates.
A professional relocating for work. For an employee with a salary and a small investment portfolio, FIG combined with Overseas Workday Relief can produce noticeable savings in the first years. If the profession is on the IFICI list, Portugal offers 20% on employment income for ten years — a longer horizon than the UK relief.
A family planning to stay for the long term. If the horizon is 15 years or more, inheritance tax becomes decisive. In the UK, after ten years of residence overseas assets fall within IHT. Italy and Cyprus are gentler in this respect. Such families usually benefit not from choosing “the lowest rate” but from getting the ownership structure right before the move.
A broader view of UK taxation, covering income tax, capital gains, inheritance tax and the FIG regime, is available on the UK tax solutions page. Below are real stories of clients who planned their taxes when moving to the UK.
Client stories on tax planning
Tax planning for married couple moving to England to settle (Indefinite Leave to Remain)
Tobias and Hannah moved to the UK from Austria. The couple received a pre-settled status, which is granted to EU citizens, permitting them to relocate...
Tax planning for a foreign person when moving and buying a property in England
Pablo is originally from South America. He has been living in Britain for several years. His business involves supplying construction equipment to...
Tax planning in England for a client with an investor visa
Andy is a long-standing client of Imperial & Legal. We helped him to obtain a UK investor visa and settle in London. He is originally from South Africa, but he changes locations quite often to...
UK Relocation and Business Development for Italian Entrepreneur
An Italian entrepreneur contacted Imperial & Legal to get help with choosing and obtaining a visa for relocation to the United Kingdom....
Questions about tax often arise not before the move but afterwards, when income keeps arriving from different countries. One client explained why she decided to deal with it straight away.
When my husband got an interesting job offer from the UK, we immediately decided to relocate. I run an online business and can work from anywhere in the world. However, I understood that it was not so easy since I received payments from different countries and feared that I might get into trouble with tax authorities. That’s why, I decided to contact Imperial & Legal’s specialists who helped me do everything right.
Common mistakes when choosing a regime
Most problems with new-resident regimes arise not from complex rules but from decisions taken too late or without calculation. These are the mistakes seen most often.
- Miscounting years of non-residence. A single “accidental” year of UK residence in the past — for example, because of a long secondment — can close off access to FIG. It needs to be checked under the SRT year by year, not from memory.
- Mixing capital in the same accounts. If money earned before the move and income from the relief period sit in one account, proving their origin becomes difficult. This matters both for TRF and for later taxation.
- Choosing Italy with insufficient income. A flat tax of €300,000 makes sense only with very high foreign income. With moderate income, the ordinary scale or another regime may be cheaper.
- Counting on IFICI without a qualifying activity. Portugal’s regime is not designed for passive investors. Without qualifying work from the list there is no relief, whatever your residence history.
- Missing deadlines. The FIG claim is made in the return for each year, and the IFICI application by 15 January of the following year. A missed deadline usually means lost relief for that year.
- Ignoring inheritance tax. Four years of FIG pass quickly, while the IHT 10-out-of-20-years rule continues to apply long after — including after you leave the UK.
Almost all of these mistakes can be avoided by reviewing your situation before the move rather than after your first tax return. Practical examples of how UK taxation works in real cases are covered in the article with tips on paying UK taxes.
Tax planning
Compare the regimes before you move, not after your first return
Tax residence review
Checks of residence history and access to reliefs
Capital segregation
Separate accounts for pre- and post-arrival funds
Jurisdiction comparison
Tax modelling for the UK, Italy, Cyprus and Portugal
HMRC reporting
FIG claims and annual Self Assessment returns
Even when the issues to address are clear, the choice of a specific country depends on the details: how much you earn, from which sources and how long you plan to stay. To see the full picture, it helps to set the strengths and weaknesses of each regime side by side.
Pros and cons of each regime
Each regime has an obvious advantage and a less obvious cost. The UK FIG regime wins on flexibility but loses on duration. Italy gives certainty but is expensive. Cyprus is accessible to almost anyone, but the relief mainly concerns passive income. Portugal is generous, but only for a defined group of professionals.
| Regime | Advantages | Disadvantages |
|---|---|---|
| UK FIG | Full relief on foreign income and gains; funds can be brought into the UK freely; no fixed charge; you choose which income to claim on | Only 4 tax years; strict 10-year non-residence condition; loss of personal allowance and CGT exempt amount; IHT on overseas assets after 10 years of residence |
| Italy (24-bis) | Up to 15 years; fixed amount regardless of income; exemption from IVIE/IVAFE and inheritance tax on overseas assets | €300,000 a year for new entrants; poor value with moderate income; exclusion for qualifying shareholdings in the first 5 years |
| Cyprus (non-dom) | Accessible entry conditions; SDC exemption on dividends and interest for up to 17 years; no inheritance tax; 60-day rule | Income tax on salary and other income at ordinary rates; extension after 17 years costs €250,000 per 5 years |
| Portugal (IFICI) | 10 years; 20% on qualifying activity income; exemption of most foreign income | Only for specific professions and sectors; foreign pensions not exempt; strict registration deadline; former NHR participants excluded |
This table shows general patterns, but it is no substitute for a calculation. Two people with the same wealth can reach different conclusions because one receives income as dividends and the other from the sale of a business.
How to choose a regime for your situation
It is easiest to start from questions rather than countries. The answers quickly narrow the choice down to one or two options that are worth modelling in detail.
- Do you plan to live in the country for less than five years? The UK FIG regime may be the best fit: the relief covers almost the whole period, and the long-term IHT consequences do not have time to arise.
- Is your foreign income very high and stable? The Italian flat tax provides certainty for years ahead — provided your income is well above the level at which €300,000 becomes cheaper than the ordinary scale.
- Is your main income dividends and interest? Cyprus non-dom status is worth considering first: the SDC exemption lasts a long time and the entry conditions are accessible.
- Do you work in technology, science or another field on the IFICI list? Portugal may offer a favourable rate on earnings and an exemption on foreign income for ten years.
- Is your main goal to pass wealth on to your children? Inheritance tax and where your heirs live become decisive, not the income tax rate.
In many cases the answer is not a single country. For example, you could spend the first years in the UK under FIG and then move your residence to a country where the long-term rules are more favourable. Such routes need careful planning of dates to avoid dual residence and losing relief in both countries.
Which regime works best for you
The UK FIG regime, the Italian flat tax, Cyprus non-dom status and Portugal’s IFICI solve different problems. FIG suits people arriving in the UK for the first time in ten years who want time to restructure their wealth over the first four years. Italy suits people with very high foreign income who value long-term certainty. Cyprus suits owners of capital living on dividends and interest. Portugal suits professionals whose work is on the IFICI list.
There is no universal answer, and the most common mistake is to choose based on one number. The decision should take the whole horizon into account: how many years you will live in the country, what happens after the relief ends and where your heirs will live. The rules in all four countries have changed over the past two years, so before moving it is important to rely on the conditions in force on the date you enter the regime.
This article is for general information only and does not constitute individual tax or legal advice. The tax consequences depend on your personal circumstances and may change with the law. Please consult a qualified adviser before making any decisions.
